ECB: Enhanced policy optionality

BNP Paribas Team BNP Paribas

Since its launch, the ECB’s asset purchase programme has had, through various transmission channels, a significant impact on financial markets, activity and inflation. In recent months, doubts about the positive effects of additional purchases and concerns about possible negative consequences have increased. Against this background, the ECB has cut the link between the timing of the end of net asset purchases and the rate lift-off. This is a welcome decision that increases the governing council’s optionality. The new staff macroeconomic projections remind us of the pervasive uncertainty we are facing. In such an environment, monetary policy can be nothing else than data-dependent.

Read the complete EcoWeek here

Author

BNP Paribas Team

BNP Paribas

BNP Paribas Economic Research Department is a worldwide function, part of Corporate and Investment Banking, at the service of both the Bank and its customers.

AUD/USD holds steady near 0.7200 amid escalating US-Iran tensions

AUD/USD consolidates just below its highest level since mid-May, touched on Friday, and hovers around 0.7200 at the start of a new week amid mixed cues. Hawkish RBA expectations continue to act as a tailwind for the Aussie. Meanwhile, the upbeat US NFP report lifted Fed rate hike bets, which, along with escalating US-Iran tensions, underpins the safe-haven US Dollar and caps the currency pair.

USD/JPY hovers around 156.00 as more hawkish BoJ bets cap gains

USD/JPY holds steady above 156.00 on Monday as the US Dollar draws support from escalating US-Iran tensions and rising Fed rate-hike bets, bolstered by Friday's upbeat NFP report. Moreover, concerns over Japan’s fiscal outlook keep the Japanese Yen on the back foot and support the currency pair, though more hawkish BoJ expectations and a suspected intervention cap the upside.

Gold sticks to losses as bears await acceptance below $4,400 amid Fed rate hike bets

Gold attracts some sellers for the second straight day, though it lacks follow-through, and hovers around the $4,400 mark heading into the European session. Moreover, the commodity holds above Friday's swing trough, touched in reaction to the upbeat US monthly employment details, warranting some caution for bearish traders before positioning for any further losses.

Cardano: Strengthening momentum points to cautious upside extension

Cardano trades around $0.222 after rallying over 15% last week. Mixed derivatives data and mildly bullish on-chain metrics point to cautious market sentiment. Meanwhile, strengthening momentum indicators suggest ADA could see further gains if the recovery continues. Cardano derivatives metrics show a mixed sentiment. CoinGlass’ long-to-short ratio for ADA reads 0.94 on Monday.

US Dollar Weekly Forecast: Why one inflation report could matter more than a blockbuster NFP?

Joy can’t last forever, can it? The US Dollar rapidly faded its prior gains and resumed its marked downside this week, with the US Dollar Index coming close to its psychological 100.00 barrier, only to see that dream turn to ashes as market chatter reignited speculation that the Bank of Japan might hike its policy rate at its next meeting.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.